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Please help! 1098T and loans etc...

crazymomof5crazymomof5 Posts: 1Registered User New Member
Ugh.... Hours and hours and hours trying to figure this all out. Does she have to pay taxes or not? Whats free whats not? etc.etc

PLEASE HELP ME! *lol*

I received the 1098T and here is what I have. She is just freshman so please bare with me as this is the first time having to deal with all this.

BOX 2 $23630 tuition billed
BOX 5 $10079 scholarships


Now here is the tricky part. She had to take loans out for $10,000 only of a $33,000 a year tuition , room and board school. The rest was all scholarships and grants.
Now obviously the 1098T is incorrect.

My biggest concern is this: One of her scholarships on the Student bill says
1st Gen scholarship- room $1685

The total 1st Gen scholarship was over $11,000 so you can see that a majority of it went towards tuition and fees,

I am just completely lost. If I subtract the $10K in loans and that still leaves $13,000 left that was covered by scholarships in addition to the $10k for room and board.


Is there any way to make the 10K in loans look like it was for room and board? Or do we have to pay tax on the $1685 times 2 semesters?

I hope this makes sense because my brain is spinning!
Post edited by crazymomof5 on
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Replies to: Please help! 1098T and loans etc...

  • inwoodinwood Posts: 9Registered User New Member
    It is my understanding that grants or scholarships are not taxable unless they exceed the cost of tuition & fees (romm & board not included).
    It looks like your tuition bill was higher than the amount of scholarships. If you use a tax program like Turbo tax, they ask for information on all of the lines on the 1098-T. The computer program will determine any tax liabilty.

    Hope this helps.
  • alamemomalamemom Posts: 6,384Registered User Senior Member
    It sounds like you believe that your 1098-T is incorrect. Ours was, too. I called the school and they checked on it, agreed that it was wrong, and issued a new 1098-T.
  • swimcatsmomswimcatsmom Posts: 14,999Registered User Senior Member
    It is my understanding that grants or scholarships are not taxable unless they exceed the cost of tuition & fees (romm & board not included).
    If scholarship specifies that it is for room and board then it is taxable. If it does not specify what it is for then you can choose what expenses you use it for.

    From IRS 970

    http://www.irs.gov/pub/irs-pdf/p970.pdf page 6
    However, in order for these to be qualified education expenses, the terms of the scholarship or fellowship cannot require that it be used for other purposes, such as room and board, or specify that it cannot be used for tuition or course-related expenses.

    There is a little worksheet there on page 6 as well that tells you how to figure out what is taxable.
  • northwesternnorthwestern Posts: 100Registered User Junior Member
    After I got my D's 1098-T, I got confused to file this year's tax return. I am going to put her as a dependent in my return, but she will also file her own because she has other incomes.

    My D's college freshmen year's tuition was $24,000(Numbers are not exact.) and she got $26,000 scholarship in 2008-09, so she needs to report $2,000 as her income since it was used for her r&b.

    However, according to her 1098-T, Box 2 is $24,000, and box 5 is $13,000. Box 2 reflects the whole one year's tuition and Box 5 reflects only the first semester's scholarship. Should I follow the numbers on 1098-T, or should I follow my own calculation and report $2,000 as her income?

    If she follows the numbers on 1098-T, it looks like she(or parent) paid $11,000 ($24,000-$13,000) for her tuition, but it is not the true amount we paid. Another problem is the second semester of her senior year's scholarship will have to be paid after she gradated from college.

    Have anyone faced similar dilemma?
  • TPATHTPATH Posts: 7Registered User New Member
    If I may piggyback on the 1098-T question(s).........

    I've received my first 1098-T Form. Box 2 lists "Amounts billed for qualified tuition and related expenses" as $18,212.00. Box 5 lists "Scholarships or grants" as $8,100.00. Box 1 regarding "Payments received for quailfied tuition and related expenses" is blank, which I understand is quite common on the 1098-T Form.

    Question: My tax preparer merely took the figure in Box 2 ($18,212.00) and minused Box 5 ($8,100.00) resulting in $10,112.00 in qualified tuition. I paid less than that amount due to an additional grant provided BY THE SCHOOL! For whatever reason, the school didn't report this additional grant in Box 5.....only the scholarship. My tax preparer said that since the school provided the 1098-T to the IRS, we just go with their numbers and use the $10,112.00 to qualify for the Lifetime Learning Credit ($10,000 x 20% = $2,000.00 credit).

    Does anyone know if my tax preparer is right or wrong in his thinking??? Thanks in advance for any advice!
  • somemomsomemom Posts: 9,277Registered User Senior Member
    I have always gone by the amounts on the form, but I spoke to a school today and learned my graduating DD with show the 'scholarship' for two quarters (grad student tuition remission) but only the tuition paid for one quarter as they tally the tuition when billed (Dec) and the scholarship when funded (Jan), so she will have income and no education tax credit for 2009 :(
  • northwesternnorthwestern Posts: 100Registered User Junior Member
    TPATH, I am in a similar situation. My D's tuition billed(box2) is higher than the scholarship(box5), but actually my D got more scholarship than tuition in 2008-09 academic year. It is because her college included both semesters tuition amount on box2 but included only first semeters scholarship on box5 since the second semester started in Jan. I am still trying to figure out which is more appropriate to file my tax return. My own calculation vs just following the numbers on the form.
  • northwesternnorthwestern Posts: 100Registered User Junior Member
    TPATH, I am in a similar situation. My D's tuition billed(box2) is higher than the scholarship(box5), but actually my D got more scholarship than tuition in 2008-09 academic year. It is because her college included both semesters tuition amount on box2 but included only first semeters scholarship on box5 since the second semester started in Jan. I am still trying to figure out which is more appropriate to file my tax return. My own calculation vs just following the numbers on the form.
  • xiggixiggi Posts: 22,892Registered User Senior Member
    First, ALL scholarship income is taxable. Secondly, it should be taxable in the year it was disbursed. However, this does not mean that the student has taxable income for the year reported. Schools can elect to report the qualified expenses in the year they were paid, billed, or accrued.

    The differences between the qualified expenses and the PAID scholarship is what contributes to the "strange" 1098 forms. Also, the school might not always report outside scholarships or even pick up the correct disbursements of Pell, SEOG, and other grants. You probably will have an incorrect 1098 as a freshman and a correction during the sophomore year. If you are not careful, the taxable income during the second year of college could trigger a susbtantial taxable income because of the corrections.

    For all the above reason, a taxpayer does NOT have to follow the 1098 to the letter --and probably should not. However, it is a good idea to reconcile the exact figures you will use on the return to the 1098 with a statement. Attaching a statement is always a good idea because there is really not much space to report scholarship income. It's also a good idea to remain consistent year after year and follow the exact dates of receipts and payments. Tracking the payments and scholarship income to the college STATEMENTS is always a good idea. Remember to add the outside scholarships if they were not paid to the school directly.

    Lastly, you can expect the school to be quite conservative on the issue of fees and books and NOT report them as qualified expenses. Since there are several contradictions in the IRS guidelines, most taxpayers would have a case to add a few expenses that were not reported by the schools on the 1098.

    Last but not least, even if the student does not have taxable income after make changes to the 1098 reporting dates, it is wise to file the tax return that shows no tax due. It will help clarifying issues with the financial officers at te school in later years, and avoid seeing unfortunate changes made to your FAFSA by overzealous junior officers.

    In all case, keeping accurate documentation during the 5 years will greatly help. This, keep all your bills and DO check them often.
  • xiggixiggi Posts: 22,892Registered User Senior Member
    Does anyone know if my tax preparer is right or wrong in his thinking??? Thanks in advance for any advice!

    Is your taxpayer willing to sign a complete acceptance of responsibility for using a 1098 that might be incorrect or incomplete? If you know that the 1098 is not correct, do not assume that simply using the numbers printed is sufficient. If you are aware of an additional grant that was not reported, do not follow the advice of your tax preparer.
  • jjcddgjjcddg Posts: 508Registered User Member
    My son's 1098-T also reflected 2008/2009 expenses and only scholarships that were credited prior to Jan 2009. I also had the concern that second semester senior year scholarships would be taxable. However, if you look at the instructions for the tuition deduction, hope and lifetime learning credits it states that your 1098 may be different from what you paid. (I only included the statement from form 8917, but the instructions for the other forms also say the same thing.


    You should receive Form 1098-T, Tuition Statement, from the
    college or university reporting either payments received in box 1 or
    amounts billed in box 2. However, the amounts in boxes 1 and 2 of
    Form 1098-T may be different than what you actually paid. On Form
    8917, line 1, enter only the amounts you paid in 2008 for qualified
    expenses.

    I'm just keeping all of my son's tuition bills and records of payments in with my tax info in case of any problems.
  • jjcddgjjcddg Posts: 508Registered User Member
    The following is info from the instructions for tax form 8917 (tutiion and fees deduction) The instructions for the hope and lifetime learning credits include the same information (except the form # and line numbers are different.) I hope this helps


    You should receive Form 1098-T, Tuition Statement, from the
    college or university reporting either payments received in box 1 or
    amounts billed in box 2. However, the amounts in boxes 1 and 2 of
    Form 1098-T may be different than what you actually paid. On Form
    8917, line 1, enter only the amounts you paid in 2008 for qualified
    expenses.
  • standrewsstandrews Posts: 1,365Registered User Senior Member
    I had the same issue dealing with the 1098-T for my son for the first time. When I tried to figure it out on my own, I was never certain I was doing it right. After plugging the numbers into TaxCut Basic and seeing how the tax software handled it, it all made sense.
  • swimcatsmomswimcatsmom Posts: 14,999Registered User Senior Member
    I think you are supposed to use actual figures for the year even if they are not reflected on the 1098. Just make sure to keep copies of statements/receipts files with your tax papers.
  • bbhillbbhill Posts: 27Registered User New Member
    i have this same issue myself. Basically, not all of my scholarships ended up getting reported to my college, so my 1098t form only has 8840 as the amount of scholarships. However, that amount is actually about twice that much. Thus if I were to use the REAL figures I would be owing about 1200 more in taxes. I'm pretty sure we have to use the actual figure. . . :(
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